The Aerospace Industry Association of Canada (AIAC) held its 44th
annual general meeting in Toronto in September and was told the
industry is improving but still isn’t rosy.

“All
is not rosy in the industry but it is brighter,” AIAC chairman David
Caddey told delegates. “The aerospace industry must meet and exceed its
customers’ expectations if it is to survive and prosper. We must pull
together as a team in Canada to find new and better ways to compete
globally as an industry.”

The theme of this year’s meeting was
delivering customer value. Robert Gillette, president of Honeywell
Aerospace, said his company has undergone transformation from a
product-focused to a customer-focused organization.

“We have
created standards across the business in terms of service, quality and
costs,” Gillette said. “We have realized that we don’t have to do
everything ourselves and have invested $300 million in developing
strategic partnerships with our suppliers. We need fewer, more
strategic partnerships that get our suppliers more involved in the
design process and in what we are doing.”

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John Crisik, president
of Electronic Systems for Goodrich Corporation, said the company is now
involving its suppliers in the lean product development process to
reduce waste in manufacturing and cut costs to customers.

He
said many aerospace companies are now going to low-cost countries such
as China to source their supply chains. “We now buy 10 per cent of our
supply chain in these countries, and that will increase in the future,”
he said. “In China, the language in the aerospace parks in now English
and they have world-class machine tools. You’d be surprised at just how
capable the supply chain is.”

Where customer value is not being
delivered is in the airline sector of the industry. Adam Pilarski,
senior vice-president of AVITAS, said many of the world’s airlines,
generally, don’t deliver value. “Airlines suck,” he said. “That’s why
they don’t do well.” Pilarski outlined what he called the 10 “plagues”
affecting airlines – “stupid management,” adversary labour relations,
overcapacity, terrorism, wars, recessions, uncertainty, oil prices,
bankruptcy protection and the US Transportation Security
Administration’s creation of no-fly lists that has included some very
public personalities.

“Joan Collins was humiliated in public by
an airport search and Ted Kennedy, who flies from Boston to Washington,
and even infants are on the no-fly list,” said Pilarsk. “The US
airlines have just forgotten that they’re in the service business.
Pricing is screwed up, capricious, random and stupid. The US is losing
to the rest of the world, which is only marginally profitable.”

Richard
Aboulafia, vice-president of the Teal Group, said the US airline
industry is recording a net loss of about $8 billion a year, Europe is
“treading water” while Asia is doing well. He predicted the airline
industry will have a “decent recovery” until 2007 when it will run out
of steam, primarily because of a weak U.S. market.

AIAC
president Peter Boag announced the association will be restructuring
itself to be more responsive to the diverse interests and needs of its
members and the current realities of the industry. It will establish
three vice-president positions responsible for identifying issues,
management and policy development and related activities in defence and
space, commercial aviation, and supply chain performance.

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